UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16635 / July 27, 2000
SECURITIES AND EXCHANGE COMMISSION v. FIRST CHOICE MANAGEMENT SERVICES, INC. and GARY VAN WAEYENBERGHE, Civil Action No. 3:00CV0446RM (N.D. Ind.)(filed July 26, 2000)
SEC OBTAINS ASSET FREEZE AGAINST TWO-TIME FELON IN AUTO RECEIVABLES FRAUD
The Commission announced that on July 26, 2000, it filed a complaint and motion for emergency relief in federal court in South Bend, Indiana, charging Gary Van Waeyenberghe, a Mishawaka, Indiana resident, and First Choice Management Services, Inc., (First Choice) with an ongoing nationwide investment fraud featuring so-called "Enhanced Automobile Receivables." In response to the Commission's motion, Judge Robert Miller imposed a temporary restraining order, an asset freeze, and other emergency relief.
According to the Commission's complaint, Van Waeyenberghe and First Choice persuaded at least 200 investors in 29 states to invest more than $21 million in the investment program from November 1999 to the present. Investors were allegedly told that their investments would be used to buy high-interest automobile loans for their own accounts, that the investments were guaranteed to yield 11%, that the loans were guaranteed against default by Lloyd's of London, that if an automobile loan defaulted, it would be replaced in the investor's account with another loan, and that the program was managed by "a highly successful and seasoned management team, most of whom have maintained senior level positions with top-level corporations for almost 20 years."
The complaint alleges that the head of the "management team", Van Waeyenberghe was enjoined for his role in a securities fraud in 1984, has twice been convicted of felonies including mail fraud, conspiracy to defraud the United States, and preparing false tax returns, and is now under indictment for bank fraud and bankruptcy fraud. The complaint further alleges that Van Waeyenberghe and First Choice have misappropriated millions of dollars from the amounts invested, that the automobile loans were not purchased as promised, that the investments were not insured against default by Lloyd's of London, and that First Choice could not guarantee an 11% return as promised.
The Complaint alleges that Van Waeyenberghe and First Choice violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to emergency relief, it seeks a preliminary injunction, a permanent injunction, disgorgement of profits, civil penalties, and other relief. A hearing on the Commission's motion for a preliminary injunction is set for August 1, 2000.
The Commission thanks the South Bend, Indiana, office of the Federal Bureau of Investigation for its cooperation and assistance in this matter.